Earning top billing among its renewable energy peers, Quanta Services has powered into a new buy zone. Showing strong institutional demand, the energy, communications and utilities infrastructure leader has landed a spot on IBD Leaderboard.
It also joins the latest list of new buys by the best mutual funds, with top money managers scooping up nearly $418 million worth of PWR stock.
As outlined in The New America in June, Quanta Services benefits from the $1 trillion infrastructure bill signed into law last year.
Inflationary pressures remain as President Joe Biden gets ready to sign the Inflation Reduction Act into law this week. Described as the largest climate change package in U.S. history, the bill aims to cut greenhouse gas emissions, as well as lower prescription drug prices.
While the new plan may not stem inflation, the act should provide a major boost to Quanta's renewable energy infrastructure initiatives.
See Who Joins PWR Stock On IBD Leaderboard
Renewable Energy Initiatives Energize Quanta
Headquartered in Houston, Quanta provides specialized contracting services for the utility, renewable energy, communications and pipeline industries. With operations throughout the U.S., Canada, Australia and other international markets, the company's footprint ranges from oil and gas pipelines and aviation to 5G networks and energy storage.
Quanta books 59% of revenue through its Electric Power segment, while the Underground Utility and Infrastructure Solutions segment accounts for 27%.
This market leader recently announced a new Renewable Energy segment, which will include solar and wind project services.
In October 2021, Quanta acquired Blattner, one of the largest utility-scale renewable energy infrastructure solutions in North America. It then completed the Manatee Battery Energy Storage Center in Florida at the end of the year, creating the world's largest solar-powered battery.
Last month, it signed a contract (beginning in 2023) to provide engineering, construction and program management services for a nationwide EV direct-current fast-charging network.
Quanta released Q2 earnings on Aug. 4, powering 45% earnings and 41% sales growth year-over-year. The company also bought back 731,000 shares worth $85 million during the reporting period.
EPS growth has averaged 45% in the last three quarters and 25% in the last three years. Analysts are forecasting 20% Q3 growth and a 28% gain for the fiscal year.
These solid numbers have helped Quanta secure a 96 Composite Rating and top billing in its industry group. Fellow sector leaders include KBR and Jacobs Engineering.
PWR Stock Recharges Buy Zones
Quanta reset its base count in May when it undercut the low of the prior chart pattern. PWR stock then eased into a first-stage cup with handle, clearing a 138.56 buy point on July 28, just ahead of earnings.
The stock fell after the Aug. 4 report, slipping back below the entry. But this renewable energy leader quickly found support at its 21-day moving average and is trading well above its 50-day line.
It has since retaken the initial buy point and lifted back into the buy zone, which extends to 145.49. Quanta closed Monday's session at 142.88.
Note that volume since the rebound started last week has failed to match volume posted during the post-breakout pullback. As a result, investors should watch for heavier upside volume as a sign that the stock is ready to resume its climb.
Also keep an eye on the relative strength line.
The RS line has moved sideways recently on the weekly chart. However, it remains near a new high, so an upward turn will show rising market leadership.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
